Are narcissistic CEOs bad for business?

“What boards of directors need to do though is go further and try to evaluate not just the idea and the confidence of the person proclaiming the idea, but what is their long-term source of knowledge going to be?” says Jennifer Chatman of UC Berkeley. - ThoroughlyReviewed/Visual Hunt

Silicon Valley loves a charismatic founder story. But there's a difference between vision and leadership and … narcissism. New research shows that narcissistic CEOs are bad for business. Jennifer Chatman, a professor of management at UC Berkeley's Haas School of Business who has researched the tech industry, found that narcissistic CEOs tend to pay themselves more and pay their executives less. They get involved in more lawsuits because they take more risks than they need to. And they tend to hire people more because of their loyalty than their skills or judgment. Molly Wood asks Chatman if the myth of the genius founder means a lot more narcissists in tech. The following is an edited transcript of their conversation.

Jennifer Chatman: We hear a lot about CEOs who are founders in the technology industry adopting behaviors that appear high on the narcissism scale. But, in the end, there are as many founders who are not narcissistic as there are founders who are narcissistic. So it's not really a causal factor. You don't have to be a narcissist to be a founder.

Molly Wood: It sounds like it's hard though to disentangle those two perceptions, right?

Chatman: It's very hard to disentangle them, particularly if you think about being a board of directors who's selecting a new CEO, and the CEO is savvy enough to put his or her best foot forward. It's much easier to see the energy and the vision and the confidence and harder to detect how the person treats other people, how much he or she will claim credit for success and so forth. And so one recommendation is to really build into evaluation tools the ability to get a much more nuanced understanding of these kind of downsides of the narcissistic personality.

Wood: What will it take for companies to get better, boards of directors to get better, venture capitalists to get better at weeding out these personalities?

Chatman: Well, I think what's so tempting in the entrepreneurial world is that entrepreneurs are almost selected based on having delusions of grandeur, thinking up things that haven't existed before and having confidence in those visions. What boards of directors need to do though is go further and try to evaluate not just the idea and the confidence of the person proclaiming the idea, but what is their long-term source of knowledge going to be? Are they going to only rely on their own instinct and their own ideas?

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Molly Wood is the host of Marketplace Tech, a weekday show that helps listeners understand the business behind the technology that’s rewiring our lives. In addition, she joins forces with Marketplace host Kai Ryssdal to connect the dots on the economy, tech and culture as co-host of the...